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Property investment and management house Segro has cash on hand and is ready to take advantage of tumbling prices, but warns the bottom of the market is still some way off.
Segro, formerly Slough Estates, sold its US business last year before the credit crisis hit, leaving its balance sheet strong. Chief executive Ian Coull said: "The key is knowing when the bottom of the market has hit so we can dive in. In my view, we are not there yet."
Segro, whose clients include Tesco, DHL and Mars, admits its properties have fallen in value in line with the market but says demand from corporations for rental space remains high.
Said Coull: "Market conditions are pretty tough right now, but despite all the negativity there is still very strong tenant demand.
"We are not so naive to believe that occupier demand can remain immune to what is happening in financial markets."
Investors will be told at the annual meeting tomorrow that Segro has 340,000 square metres of developments under construction, of which 50% have been pre-let or sold. It has debt of £2 billion but insists this is easily manageable.
Coull says he has never seen a downturn quite like this one.
"It is not something we have experienced before. In the Seventies and Nineties, the price corrections on properties were led by a downturn in occupier demand," he said.
So far, Segro thinks earnings will keep pace with City expectations, although the shares have inevitably suffered a tumble of late.
They added 4½p to 467¾p today. Segro's property assets are valued at more than £5 billion. It takes in rents of about £250 million a year.
